Incidents:
The company published its 2022 interim report. In the first half of 2022, revenue of 52,800 million yuan was achieved, an increase of 24.11% over the previous year, net profit of 819 million yuan, an increase of 47% over the previous year, after deducting net profit of 793 million yuan from non-return mothers, an increase of 52.47% over the previous year.
Commentary:
Performance growth has been steady, and sufficient orders guarantee further performance release. In 2022, with the changing international situation and repeated COVID-19 pandemics, the company actively overcame pressure from all sides to promote project execution, scientific and technological innovation, and basic management to achieve good results. The company achieved operating revenue of 26.274 billion yuan/26.524 billion yuan in the first and second quarters respectively, up 23.74%/24.47% year on year, net profit of 423 million yuan/396 million yuan, up 25.84%/79.14% year on year, and performance growth was steady. By the end of 2021, the company had orders of 232.5 billion yuan on hand, and signed a new 75.3 billion yuan from January to July 2022. The number of on-hand orders was sufficient, which guarantees the further release of future performance.
Nuclear power still has a lot of room for development. Nuclear energy is a clean base-charge energy source. The review of new nuclear power units in China has accelerated since '19. In '21, China's nuclear power generated 407.5 billion kilowatt-hours, accounting for 5% of the country's electricity generation. The share continues to increase, but compared to the 9.5% share of global electricity generation, there is still plenty of room for nuclear power generation. In '21, the Prime Minister proposed “actively and orderly development of nuclear power on the premise of ensuring safety”, and it is expected that China's nuclear power construction will continue to advance at a rate of 6 to 8 units per year in the medium to long term in the future. In August of this year, five departments including the Ministry of Industry and Information Technology issued the “Notice on the Action Plan to Accelerate the Green and Low-Carbon Innovation and Development of Electric Power Equipment”, which proposed further speeding up the batching of third-generation nuclear power and speeding up the development and application of fourth-generation nuclear power equipment.
The company's nuclear power engineering business is expected to reach another level. In the context of dual carbon and steady growth, nuclear power projects are expected to rise to the next level. The company is the only listing platform for construction projects under CNNC Group, a major entity in the national nuclear technology industry. It has dominated the domestic nuclear power construction market for a long time and is expected to benefit significantly. The company's nuclear power engineering business signed new nuclear power projects in Haiyang, Sanmen, Lu Feng, and Pakistan's Chashma in the first half of the year. The total amount of new contracts signed was 20.3 billion yuan, an increase of 42.81% over the previous year, and achieved revenue of 8.4 billion yuan, an increase of 30.7% over the previous year. The prospects are promising.
Maintain the “buy” rating, with a target price of 10.20 yuan. The EPS from 2022 to 2024 is expected to be 0.69/0.82/0.96 yuan, and the corresponding PE is 11.94/9.96/8.52 times.
Risk warning: nuclear power falls short of expectations, ESG risks, company performance falls short of expectations